Highlights of Report Number:2011-10-095 to the Internal Revenue Service Chief, Agency-Wide Shared
Services.

IMPACT ON TAXPAYERS

As
of May 31, 2011, the Internal Revenue Service (IRS) Office of Procurement was
responsible for administering 1,008 procurements with a reported life-cycle
value of approximately $39.2 billion.The
IRS does not have an effective process to ensure that contracting officers’
determinations of present responsibility are adequately conducted and
documented in compliance with Federal Acquisition Regulation requirements.As a result, the IRS has an increased risk
that procurements
may be awarded to nonresponsible
contractors.

WHY TIGTA DID THE AUDIT

This
audit was initiated because the Federal Acquisition Regulation requires that
Federal agencies award procurements only to contractors that are presently
responsible (i.e., reliable, dependable, and capable of performing required
work on time and in a satisfactory manner). The overall objective of this review was to
determine whether the IRS has an effective process for conducting and
documenting present responsibility determinations to ensure that dishonest,
unethical, or otherwise nonresponsible contractors are not awarded IRS procurements.

WHAT TIGTA FOUND

The IRS does not have an effective process to ensure
that contracting officers’ determinations of present responsibility are
adequately documented.Contract files
did not contain sufficient documentation to support IRS contracting officers’
affirmative determinations of contractors’ present responsibility in 60 (68 percent)
of 88 files reviewed.In addition,
managerial reviews of present responsibility determinationswere either not conducted or did not address the missing
documentation.As a
result, the IRS has an increased risk that procurements may be awarded to
nonresponsible contractors, potentially leading to additional costs to the
Federal Government due to subsequent default, late deliveries, or other
unsatisfactory contractual performance.

In their response to the report, IRS officials
agreed with the recommendations.The IRS
stated it issued new guidance which includes a requirement for contracting
officers to perform all required contractor qualification checks and maintain
documentation of these checks in the contract files.The IRS also conducted a training session
emphasizing the responsibility determination documentation requirements.Additionally, the IRS is updating managerial
review guidance to include ensuring that the responsibility determination form
with supporting documentation is maintained in contract files.

TIGTA noted that
the new guidance issued does not fully address all of the concerns TIGTA
identified.Additional guidance is needed on how procurement staff should conduct
responsibility determinations, examples of appropriate documentation to be
maintained for each of the criteria and provisions of law that must be
examined, and the specific time period for conducting contractor qualification
checks.

READ THE
FULL REPORT

To view the report,
including the scope, methodology, and full IRS response, go
to: